The Week of February 3, 2020 – February 7, 2020

William Chin, MBA

Portfolio Manager & Chief Technical Analyst

William Chin, Chief Technical Analyst for Caldwell Investment Management Ltd. (“Caldwell”), is the lead Portfolio Manager on the Tactical Sovereign Bond Fund and Portfolio Manager for the fixed income portion of the Caldwell Balanced Fund. He also advises fixed income portfolios for affiliate Caldwell Securities Ltd.’s separately managed account platform and contributes to the Caldwell Investment Management Ltd. team’s research, specializing in macro-economics, currency risk management and technical analysis. William is a member of Caldwell’s Investment Risk Committee.
William has over 35 years of international investment experience in the areas of portfolio, currency risk and treasury management. He began his career in the currency market, progressing to the role of treasury manager for a large international bank. He was first registered as a Portfolio Manager with the Ontario Securities Commission in 1999 and managed high net worth client portfolios on a discretionary basis prior to joining Caldwell.
William has an MBA in economics and international finance. He has been a volunteer and a board member for the Canadian Society of Technical Analysts since 2001 and is their former President (2012-2014).
William is a frequent speaker on macro analysis, monetary policy and technical analysis.

Macro Update

• U.S. and Canada both posted strong employment reports for January. However, markets are looking past them as risk appetite took a back seat due to the virus situation. China delayed its publication of January trade figures.
• Developments in the spreading of the virus are now worse than the more ‘optimistic’ models, so risk appetite in the financial markets might adjust lower somewhat. Also important to note is that there is sufficient evidence to suggest that China is under reporting numbers regarding the virus. There is also evidence of supply chain disruptions related to the virus.
• U.S. January ‘nonfarm payrolls’ gained 225,000. The two-month cumulative revision is a positive 7,000. Wage pressures remained tame as ‘average hourly earnings’ rose only 0.2% m/m. The ‘average work week’ was steady at 34.3 hours. The unemployment rate rose 0.1% to 3.6%, but the ‘participation rate’ more than made it up by rising 0.2% to 63.4%.
• Canada gained 34,500 new jobs in January. Most of the gains in January were concentrated in the public sector, expanding by 21,300; private sector employment was up 5,000 and self-employment rose by 8,300. Wage gains accelerated 4.4% y/y and ‘hours worked’ rose 0.5%. The unemployment rate fell to 5.5% from 5.6% in December.
• U.S. December exports rose 0.8%; imports rose 2.7%. That is an improvement. Versus China, for 2019, imports fell 16.2% and exports fell 11.3%.
• Canada December exports rose 1.9%; imports rose 0.2%, also an improvement on a month-to-month basis. For 2019, exports rose 1.7%, imports rose 1.0%; both are weak numbers. Exports to China fell 16.0% for 2019, and it is the first decline since 2014, and the largest drop going back to 1997. The drop was assigned by most as a result of the arrest of the Huawei CFO.
• Germany December industrial production fell 3.5%, more than wiping out the 1.2% gain in November. It is also the biggest drop in more than 4 years. One can only expect worse results in January.
• Eurozone December retail sales fell 1.6%, prior was a 0.8% gain. On a y/y basis, retail sales eased to just 1.3% gain, from 2.3% in November.